Israel said al-Qaissi was plotting an attack similar to the raids in August last year, where four groups of militants crossed over the border from Egypt's Sinai Peninsula and killed six civilians and two members of the security forces.

Al-Qaissi was reportedly also in charge of funneling money the Lebanese group Hezbollah to militant organisations in Gaza. His predecessor, Kamal Nairab, was killed by a similar Israeli strike seven months ago.

A PRC spokesman promised retribution for yesterday's attack, saying: "We shall avenge our leader and the response, God willing, will be equal to the size of the heinous crime."

The PRC are among the most active groups firing rockets into Israel but are best known for orchestrating the kidnap of Mr Shalit in June 2006.

The Israeli conscript was held for more than five years until Israel agreed to free more than 1,000 Palestinian prisoners to secure his release in October last year.

While Mr Schalit returned to a hero's welcome in Israel some questioned the wisdom of freeing so many suspected militants, many of whom vowed to return to the fight against the Jewish state.

The peace process between Israel and the Palestinians has largely stalled in the last year as focus shifted to the Arab Spring and Iran's nuclear ambitions.

Riad Malki, the Palestinian foreign minister, said yesterday that American diplomats had warned him the US would be unable to focus on the issue until after the presidential election in November.